Seoul, technology is embedded in its infrastructure

Seoul’s transformation into a global tech city has been rapid.

6 July 2015, words by Paul Tostevin

A programme of industrialisation and export oriented development transformed it in less than four decades into a global economic hub of 10 million people at the cutting edge of technological innovation. So remarkable has Seoul’s transformation been that it earned the title ‘Miracle on the Han River’ and became a model for fast-growing cities in China, India and Brazil.

Much of Seoul’s success is down to huge home-grown ‘chaebol’ – family controlled business conglomerates. Two of the largest, Samsung and LG, are global players in the tech sector. National, domestic companies dominate the home market, for example Google plays second fiddle to local search giant Naver (South Korea is one of the few countries in the world where Google is not the dominant search engine). Seoul residents are early adopters of new technology with a particular emphasis on mobile. This huge home consumer base has given large firms a solid platform to expand abroad.

Technology is embedded in Seoul’s infrastructure. The Seoul Metropolitan Subway has had 4G mobile reception on trains and platforms since 2010.

It is also possible to buy tickets and enter stations using a smartphone, while stations feature the world’s largest digital signage service. Broadband speeds in Seoul have long been among the fastest globally – although the competition is catching up (Singapore and Hong Kong are already quicker).

"Technology is embedded in Seoul’s infrastructure. The Seoul Metropolitan Subway has had 4G mobile reception on trains and platforms since 2010"

Seoul offers vibrant urban living and working environments of the type that attracts talent from across Korea. Digital Media City, established in north-western Seoul in 2002, is home to 500 tech companies including LG and Pantech. The Korean government has located key cultural agencies here, including the Korean Film Archive, with a view to create more than a technology business district. Residents are known as ‘Denizens’ or ‘Digital Citizens’.

The city presents a mixed picture when it comes to quality of life. It is affordable by global standards, with restaurant and transportation costs especially low. But Korean working hours are exceptionally long and residents typically commute long distances to save on living costs.

Seoul’s talent pool is overwhelmingly domestic and attracts relatively few foreigners for a global city of its size, despite the city’s attempts to be more ‘foreign friendly’.

however, a growing tendency for Koreans to study and work abroad which means that returnees bring back with them a wealth of experience and skills. Although Korea as a country has a rapidly ageing population, Seoul is comparatively youthful. The city’s ‘millennial to boomer ratio’ is favourable, with 1.2 ‘millennials’ (those aged 15 to 34) to every 1.0 ‘boomers’ (those aged 50 to 69).

The city’s massive advantage is when it comes to research and innovation. South Korea is the world’s most R&D intensive country, with spending on research and development at 4.36% of GDP, according to the OECD – more than any other country (see Fig. 2). The rate of investment grew at an annual rate of 9.4% between 2007 and 2012, well above the OECD average of 2%. Such activity yields a lot of patents. In 2013, South Korea saw 3,186 patent applications per million population, the highest rate globally. These patents were concentrated in the fields of consumer goods, optics and digital communication.

South Korea has seen rapid economic transformation in recent decades, but culturally, the country remains conservative and business is dominated by the large and hierarchical family-owned chaebol. New businesses face a number of administrative hurdles. It takes seven days on average to start a business in Korea, quick by European standards, but slow compared to Hong Kong and Singapore.

In May 2015, Google opened its first Asian campus for start-ups and entrepreneurs in the Gangnam district. It comprises 2,000sqm of office space and aims to attract start-ups and investors. It is testament to Seoul’s importance as a tech centre in Asia that Google is focusing investment in the city. Seoul is a less international city than Hong Kong and Singapore but, thanks to its strong home consumer base, it can fulfil the role of a major tech competitor in the region.

Fig. 3 shows how Seoul ranks within our top twelve Tech Cities. Its relative regional focus pushed it down the overall rankings here. Seoul ranks comparatively lower due to a more challenging business and investment environment and generally being less ‘international’ than the competition. As a top tech city Seoul is in a strong position, but one of the biggest challenges it faces is the ability to open up more to foreign investment and influence and compete evenly with Western-facing tech cities.